The foremost thing to get the personal loan application approved is to duly fill the application form with the correct information and attach all the supporting documents alongside.

Lenders are very particular about the eligibility criteria they define for their loan products. Failing to comply with it can result in rejection of the personal loan application outright. The eligibility criteria are defined on factors like age, income, employment, and credit score. The parameters differ from one lender to another and thus it is advisable to study the same for the lender you want to opt for before applying for the personal loan.

  • Making mistakes in the loan application

Banks do not consider loan applications with mistakes or ambiguity. In fact, banks will get the application verified through third-party agencies to ensure that there is no misrepresentation or deliberate hiding of facts. Even if a personal loan application gets an in-principle approval based on the CIBIL score, the final approval of the loan can be expected only if you submit the required documents in a timely and credible manner.

  • Taking multiple loans

People generally look for multiple loans when they don’t get the desired loan amount from one lender or they have already taken a loan and want more money to meet certain expenses. But, if you take multiple loans, it could mean over-leverage and risk of falling into a debt trap which can be disastrous for your future financial security as well as it may affect your credit score

  • Ensure timely repayment of credit card dues and loan EMIs

A would-be personal loan applicant should ensure timely repayment of his existing card bills and loan EMIs before submitting a personal loan application to a lender. This is because your track record of timely debt repayment, timely repayment of credit card dues and loan EMIs ensures recovery of credit score.

  • Keep your credit utilisation ratio below 50%

The credit utilisation ratio is the proportion of total credit card limit used by a credit card holder. “Financial institutions consider credit utilisation ratio of over 30 percent as a sign of credit hungriness and hence, credit bureaus reduce credit score on breaching this limit, thereby reducing your loan eligibility. Make sure you have a credit utilisation ratio below 30 percent

  • Monthly outgo to income ratio below 50%

If you do not have adequate bank balance, the lender can reject your loan application. Most lenders consider your loan application after looking at the minimum net monthly income and accordingly, they sanction your loan amount.

that bankers calculate the fixed monthly obligations to net monthly income ratio (FOIR) and approve a loan only if this ratio is less than 40-50 percent. While calculating the ratio, the lender includes the EMI on the proposed loan along with other existing EMIs that the borrower is paying in that particular period.

“So, if you want to reduce the chances of rejection of a personal loan application, then you should estimate your loan amount eligibility beforehand and apply for the loan amount within the eligible limit. You also have the option to opt for longer tenure loans, which means lower EMIs and hence lower FOIR which again improves the chances of getting a personal loan.”